Some college graduates are doing something some may consider drastic to get out of their monthly student loan payments — they’re fleeing the country.
CNN profiled one graduate, Carl, who did just that. Carl, who declined to give his last name, estimates his private loans are more than $70,000. When Carl couldn’t make his $450 a month payments, the debt collectors started calling. That’s when he bolted.
Unable to pay the bills, and with added pressure from creditors, student loan debt can be overwhelming for young people. And the loans can’t be easily gotten rid of — even through bankruptcy.
Carl told CNN that while he hopes to one day return to the U.S. right now, staying abroad is his only option.
According to Chris Lang of the New York-based debt collection agency, ConServe, is about $60 billion in defaulted student loan debt. Lang told CNN that while only about 2 to 4 percent of delinquent student loan debt is owed from students abroad – for some, it seems like the only way out.
In order to collect from these students, collection companies would usually need to hire an international counsel or a third party collector to recoup the debt, cutting into their profits and reducing their incentive to go after a debtor, CNN reported.
Chris is in the same boat. He racked up $160,000 in student loan debt with a master’s degree in music. He thought he’d be paying $600 a month, but was astounded to find out his monthly payment came to $2,400.
“I am upset at myself. I could have gone to a cheaper school,” Chris told CNN. “But I’m most angry at the fact that for anyone who has debt that’s not student loan debt, there’s relief. You can get into $150,000 worth of credit card debt and you can declare bankruptcy and you can go on with your life. But with student loans, you’re being punished for being a better person.”
But there is SOME relief for graduates. According to Mark Kantrowitz, publisher of FinAid.org, here’s what to do if you can’t afford to pay your loans back.
- If it’s short term, apply for an economic hardship deferment or forbearance which would suspend or reduce your monthly payments. To find out if you qualify for these programs, check out the hardship calculator at http://www.finaid.org/.
If your problems are longer term – for example, your career path doesn’t pay well:
- Look into an extended repayment plan to lower your payments. Keep in mind you’ll wind up paying more in the long run.
- Talk to a non-profit counselor for free. If you are put on a managed debt program, there is typically a small fee. To find a non-profit credit counselor in your area go to the National Foundation for Credit Counseling at www.nfcc.org.
If you have federal loans through the Direct Loan program:
- You may qualify for an income contingent repayment plan. In this case your payments are based on your income and your debt load.
- Call the Federal Student Aid Ombudsman at http://www.ombudsman.ed.gov/ or call 1-877-557-2575 if you can’t resolve your issues.
If you have defaulted on a federal loan:
- To get back on track, you must make nine to 12 full payments of some agreed-upon amounts within a certain time period to the Department of Education. For more information on this, contact the Department at 1-800-621-3115.
Information compiled from CNN.
Now I know what to do! Hah…